When you are looking at how to successfully refinance things may seem very complicated and confusing, but it really is a lot simpler when broken down. To make this work well you just need some planning with a calculator, pencil, and paper.

The first thing to understand is that refinancing means to finance again. You are getting a completely new loan, which you pay off your current one with, and then just start making payments on your new loan.

If your loan is anything other than a mortgage things are really simple for you! Find a lower interest rate, or terms that suit you better, and take them.

For a mortgage things are a little more complicated. So, how to successfully refinance?

When you got your original mortgage you probably remember all of the opening costs, the appraisal fees, the insurance, etc. All of these things will have to be done again. On top of this, you will have fees to close your current loan. Check your loan terms to see if you have a fee for closing out your loan early as this can be a real problem. You want to try your best to add up all of your initial opening costs. For a general estimate many say to expect to pay 3-6% of the new loan amount plus any prepayment penalties on your old one. So, why would you want to do this with all of these upfront costs? Let's look at what you can save.

As a general rule of thumb it will probably be worth it if you can find a two percent lower interest rate. When you find this lower rate you want to break out your calculator. See how much this rate will save you each month and then figure out how long until you've started saving more money each month than you initially spent on opening costs. Will you still be living in the house at that time? Many people estimate this takes three years on average.

Now you know the simple secrets. If you break it down and add all the numbers together you'll know how to successfully refinance.